Tuesday, November 11, 2014

Investing in China ETF or Unit trust fund?

Last year October we have already talk about this, why are some unit Trust still worth investing.
Ans: They can outperform the index, give investor more returns than the performance of the index.

We compared First state Regional China Fund and United SSE A50 ETF last year and the First state RC fund out performed SSE A50 ETF. Lets see their performance again, see who is better this round.


First state Regional China Fund Annualized Performance
PeriodPerformance Returns (%)Volatility (%)Return/Volatility Ratio
1 Year10.920811.63850.9383
2 Years12.286811.79571.0416
3 Years10.459912.24760.8540
5 Years7.434413.51740.5500
10 Years11.310918.13760.6236

United SSE A50 ETF Annualized Performance
PeriodPerformance Returns (%)Volatility (%)Risk Adjusted Performance
1 Year5.769219.44460.2967
2 Years3.509821.10460.1663
3 Years-0.795320.3087-0.0392
10 YearsNANANA

Conclusion, First state regional China Fund have higher return with lower volatility. in another words that also means better profit with less fluctuation.

Another instrument you may want to know more(other than Stock and Unit Trust) is the ETF, Exchange Traded Fund. Read the following to understand why some people like to buy ETF.

ETFs are open-ended investment funds listed and traded on a stock exchange. They aim to track, replicate or correspond to the performance of an underlying index or asset. ETFs provide access to a wide variety of markets and asset classes.  



Diversification through a single investment
When you buy an ETF, you gain exposure to a diversified portfolio of securities/assets through a single transaction.  The extent of diversification benefits depends on the components that make up the fund portfolio.

Lower investment costs
An ETF incurs certain fees and expenses such as the fund management fees charged by the ETF manager and other administrative costs.  These fees and expenses are deducted from the ETF assets and the NAV may be reduced accordingly.  Like shares, trading ETFs on an exchange incurs transaction costs including brokerage commissions and clearing fees. As ETFs are passive funds, the annual management fees are generally lower at less than 1% compared to the management fees of 1% to 2% usually charged by most unit trusts or traditional funds.

Access to many markets via a single platform
The range of ETFs offered on an exchange allows investors to access many  markets via a single platform. This provides an alternative for investors who are not able to buy securities listed on foreign stock exchanges easily.

Investors can readily access real-time information such as ETF prices, fund information and index information on the websites of the issuers, index providers and the exchanges’ websites.  Market prices are published real-time through the trading day.

You can buy and sell ETFs anytime during trading hours and may employ the traditional trading techniques including stop order, limit order and short sales.
More information on the Phillip ETF website